Gap Profit Down, Cuts FY Outlook - Update

(RTTNews) - Apparel retailer Gap Inc. (GPS), on Thursday reported a decline in profit for the third quarter, hurt largely by some continued weak sales at its namesake brand and Banana Republic. Earnings for the quarter were in line with Wall Street estimates, while revenues fell short of expectations. The company lowered its full-year earnings outlook.

San Francisco-based Gap's third-quarter profit dropped to $248 million or $0.61 per share from $351 million or $0.80 per share last year.

Gap's adjusted earnings for the quarter were $0.63 per share. Analysts polled by Thomson Reuters had a consensus earnings estimate of $0.63 per share for the quarter. Analysts' estimates typically exclude special items.

Gap's sales for the third quarter dropped 3 percent to $3.86 billion from $3.97 billion last year. Thirty analysts had a consensus revenue estimate of $3.90 billion for the quarter.

Gap's comparable sales for the quarter declined 2 percent, compared with a drop of 2 percent last year, as same-store sales at Gap slumped 4 percent and Banana Republic dropped 12 percent, Meanwhile, Old Navy reported a positive 4 percent same-store sales.

"With a challenging third quarter behind us, we are sharply focused on holiday execution across all channels," said Art Peck, chief executive officer, Gap Inc. "We are driving forward on our key strategies designed to fuel future growth."

Moving ahead, the company lowered its full-year adjusted earnings guidance to a range of $2.38 to $2.42 per share from prior outlook of $2.75 to $2.80 per share. Analysts currently expect earnings of $2.50 per share for 2015.

GPS closed Thursday's trading at $25.09, down $0.30 or 1.18%, on the NYSE. The stock further dropped $0.55 or 2.19% in the after-hours trade.